Government package for the struggling tourism industry

Published on : Wednesday, June 30, 2021

The Indian government’s recently announced package for the tourism sector is well-timed and extremely necessary for the struggling industry, as it prepares for a revival with easing of restrictions after a decline in fresh cases of Covid-19.

The measures were announced by the government on Monday. These include working capital/personal loans to travel and tourism stakeholders, and are expected to put capital in the hands of hard-hit tour operators and other stakeholders for restarting their businesses.

However, the impact of the policy decision would be evident only after vaccination rates shoot up and international travel fully resumes.

“Guaranteeing working capital or personal loans of up to Rs. 10 lakh for travel and tourism players and up to Rs. 1 lakh for travel guides is expected to benefit about 11,000 stakeholders. This will help them service existing obligations, leading to an interest cost savings of 200-300 bps, and help restart businesses,” said Manish Gupta, senior director at Crisil Ratings.

“The move to provide five lakh free one-month tourist visas till March 31, 2022 amounts to only a Rs. 100 crore allocation, but importantly, it sends out a message that India is getting ready to welcome tourists. This could provide a boost to budget-conscious travellers before the inbound season, which typically starts from October,” added Gupta.

With improvement in vaccination rates, Crisil expects opening up in the second half of this fiscal year, but that would also be subject to the policies of foreign countries.